Workers’ Compensation Opt-Out Plans (NPR)

Three years ago, working halfway up a 300-foot steel tower at the LBJ Ranch, the panoramic view included the rolling green hills and meadows of the Texas Hill Country. The tower was used by former President Lyndon B. Johnson to communicate with the White House.

Walker’s wife, Krystle Meloy, was 23 then. She was home at the couple’s apartment in New Braunfels, Texas, with their 4-month-old daughter, Kaylee, when several of Walker’s co-workers unexpectedly knocked at the door.

“They just walked in very silent,” Meloy recalls, tears forming in her eyes. “They said Billy fell and he’s on his way to the morgue. And I said, ‘What?’… I just fell. And we all just started crying.”

What happened next to Meloy and Kaylee is indicative of an emerging trend in how workers and their families are compensated following workplace injuries or deaths. Nearly 1.5 million workers in Texas and Oklahoma do not receive state-mandated benefits under heavily regulated workers’ compensation and are dependent instead on alternative, largely unregulated benefits plans controlled by employers.

State laws in both Oklahoma and Texas allow employers to opt out of workers’ compensation and develop their own workplace injury plans. Those plans generally cover fewer injuries, cut off benefits payments sooner, control access to doctors and even impose mandatory settlements, according to an NPR and ProPublica investigation. In Oklahoma, we found that most plans blatantly violate the law, yet regulators say they are powerless to respond.

NPR and ProPublica obtained nearly 120 opt-out plans used by Texas and Oklahoma companies and analyzed how this alternative to workers’ comp compares with the system it’s replacing.

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